The smartest stocks to buy with $300 down
Investing in the stock market has been a bit of an adventure in 2022. Over the past three months, the three major US indices have suffered their biggest corrections in two years. In fact, dependence on technology Nasdaq Compound briefly entered bearish territory.
While the speed of broad market index declines can be frightening at times, the bottom line is that pullbacks are always an opportunity for patient investors to go on the offensive. This is because every crash or correction in history has ultimately been placed in the rearview mirror by a bull market rally.
Equally important, you don’t need a mountain of cash to take advantage of these stock market declines. Since most online brokers have dropped commission fees and minimum deposit requirements, any amount of money – even $300 – can be the ideal amount to invest.
If you have $300 on hand, which won’t be needed for bills or to cover emergencies, here are some of the smartest stocks you can buy on the downside.
The first beat stock to buy with $300 is telemedicine kingpin, Teladoc Health ( DOC 9.10% ).
Doubters have had two big problems with Teladoc over the past year. For starters, they believe that the company has had a pandemic advantage and that its growth will slow significantly when we come out of the pandemic. Second, skeptics worry about consecutive years of larger-than-expected losses from Teladoc following the costly acquisition of Livongo Health. While I understand where this opposing view is coming from, none of these headwinds have legs to stand on.
While Teladoc did well in the early stages of the pandemic, investors should recognize that this shift to virtual visit healthcare platforms began well before 2020. In the six years leading up to the pandemic, Teladoc’s sales grew at an average annual rate of 74%! It is not a coincidence. It’s a sign that the way personalized care is delivered in the United States is changing.
Telehealth is a win for all parties up and down the healthcare treatment chain. It is often more convenient for patients to communicate with doctors from home, while virtual visits allow doctors to better monitor patients with chronic conditions. The end result should be better outcomes for patients and less money in the pockets of health insurers.
As for Teladoc’s larger losses, they should be a thing of the past. With Livongo’s integration costs and stock-based compensation expected to decline significantly in 2022, the company has a pretty clear path to profitability by 2024, if not sooner.
Also, don’t overlook the importance for Teladoc and Livongo to be able to cross-sell on each other’s platforms. Although the Livongo deal was costly in hindsight, it will fuel sustained sales growth of 20% to 30% throughout the decade. This makes the nearly 80% retracement of Teladoc shares since February 2021 an ideal buying opportunity.
Another smart stock just begging to be bought with $300 is the semiconductor solutions company Qorvo ( QRVO 2.35% ). Shares are down about 35% in the past nine months, which doesn’t make much sense given how well executed Qorvo is.
There are three main catalysts that should get investors excited about the discount they can get on Qorvo right now.
For starters, it should be one of the main beneficiaries of the 5G wireless revolution. It’s been about a decade since wireless download speeds improved dramatically. Upgrading the 5G wireless infrastructure should encourage a regular device replacement cycle that lasts for years. Qorvo is responsible for providing a variety of connectivity solutions used in next-generation smartphones. Thus, the more smartphones manufactured and sold, the more the company has the possibility of integrating its solutions into 5G compatible devices.
The second enabler, which builds effectively on the first, is Qorvo’s close relationship with Apple. Last year, Apple was responsible for around 30% of Qorvo’s annual sales. There may not be a company in the world with a more loyal customer base than Apple, which means the 5G-enabled iPhone and its many variants should continue to drive Qorvo’s revenue and profit growth.
The third upside momentum is the company’s ancillary revenue opportunities outside of smartphones. For example, Qorvo provides advanced antennas that enable next-generation automobiles to connect to the cloud. While these ancillary revenue streams trump smartphones in total sales, they will likely provide a faster growth opportunity throughout the decade.
With Qorvo offering low double-digit sales growth and a P/E ratio of just 10 for the year ahead, it appears to be a perfect blend of growth and value.
For you value investors, telecom stocks AT&T ( T 0.50% ) might just be one of the smartest places to put $300 to work right now. Shares of the widely followed company have fallen 30% since hitting a 52-week high in May 2021.
The big blow to AT&T in recent years has been its lack of growth and high debt levels which have somewhat limited its financial flexibility. The good news is that AT&T has a way to address both of these concerns in the years to come.
To echo what has been said about Qorvo, AT&T should notably benefit from the ongoing deployment of 5G wireless infrastructure. While it will be costly and time-consuming for AT&T to upgrade its network, faster download speeds will encourage the company’s wireless subscribers to use more data. Since data consumption is driving the company’s juicy wireless margin, this is an easy way to increase its organic growth rate.
The other significant growth catalyst for AT&T is the upcoming spin-off of its content arm, WarnerMedia, and WarnerMedia’s subsequent merger with Discovery to create a new media entity. This new company, WarnerMedia-Discovery (no points awarded for originality), is expected to recognize over $3 billion in annual savings and have approximately 94 million streaming customers (on a pro forma basis).
After the spin-off, AT&T will focus on debt reduction. Although its dividend will be slightly more than halved to reduce cash outflows and pay down debt, the company will retain its high-yield status. This higher yield can be particularly useful in a high inflation environment.
Compared to Teladoc and Qorvo, AT&T is a turtle on the growth front. But its telecom and media operations are highly profitable and highly predictable from a cash flow perspective. That makes AT&T shares an outright steal at less than 8 times projected 2022 earnings.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.